Government Suing to Block Modelo Takeover by InBev

The Justice Department filed a lawsuit to block InBev's BUD $20.1 billion deal to control Grupo Modelo SAB, the makers of Corona Extra beer, Modelo Especial and Pacifico. InBev sought to purchase the 50 percent of the company that it did not already control. The company was seeking to gain a stronghold in the fast growing Mexican market while expanding the Modelo brands. The Justice Department's Bill Baer, however, said that the deal "would result in less competition and higher beer prices for American consumers." The antitrust chief added that "this lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry." Shares of Constellation Brands STZ plunged on the news as the company was going to purchase the 50% stake in Crown Imports, a joint venture between Modelo and Constellation, it doesn't own as part of the deal. Crown Imports imports and markets Modelo brands in the United States. The deal was valued at $1.85 billion. Shares of Grupo Modelo GPMCF were trading down around 7.50 percent in the United States while InBev was last down around six percent to $88.44. Constellation brands said that it was "disappointed" with the lawsuit and that it looked forward "to an expeditious resolution."